Socialism Vs Socialist Economy

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Socialist and Capitalist Economy
Economy is the entire process and network, through which goods and services are exchanged in a country or state; and the system of production, allocation of resources, distribution and exchange of goods and services is called economic system. Moreover, the relation and condition to use resources for production and trade with law, custom and government of a country is called political economy. However, under political-economic systems, various types of economic systems have influenced such as; capitalism, socialism, communism and so forth. Capitalist and socialist economies are the most common economic systems in the world, where their major differences are in the economic equality and the role of government;
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The main motive and purpose of this system is gaining personal profit hence, all the resources are used to their optimum level and there is less wastage of goods. Since the sole purpose is profit, there is less public welfare activities in capitalism. Whereas in socialism, there is no freedom of occupation and every person is provided job by the state. Unlike capitalism, in socialism the primary objective is equal distribution of national income. There is greater welfare than capitalism because all the citizens work for the state and the earned profit is utilized in covering all aspects of economy like: providing free education, public health facilities, security, economic development and so…show more content…
In capitalism, consumer is known as king of the market. Every producer gives attention and importance to consumers’ taste, demand and preference. Thereby; there are large variety of goods and services for the consumer. These variety of goods within the reach of all sections of the society results in rise in the standard of living. Relatively, there is loss of consumers’ sovereignty in socialist economy because goods are produced by the state decision not by consumer demand. Therefore, consumers do not have the privilege to buy whatever commodity they want. They only have the choice to consume the commodities that are produced by the state.
Finally, there is a very tough competition among producers in capitalism. They always encourage producing best quality products for the consumer, and taking initiative to develop and invent new techniques in production. Pricing process is verified by the interaction of demand and supply of goods. By contrast, in socialism state has the monopoly. There is no competition between the firms because all the factors of production is owned by the government. Fixed prices for goods are determined by the state and regulation of central planning
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